India tops in FDI stocks in Nepal

Kathmandu, Sep 9 (IANS) Even though China maintains that it has topped Foreign Direct Investment (FDI) commitments to Nepal in recent years, it is actually India which continues to rule the roost when it comes to the actual stock of FDI prevailing in the country.

According to a study released recently by the Nepal Rastra Bank (NRB), the Central Bank, the FDI stock from India topped the chart. FDI stock is the total accumulated value of Foreign Direct Investments over time.

According to the Survey Report on Foreign Direct Investment in Nepal (2023-24), total FDI stock in Nepal stood at Rs 333 billion in fiscal year 2023-24, with paid-up capital accounting for 50.7 per cent, reserves 36.7 per cent, and loans 12.6 per cent.

Of the total FDI stock, India ranked in the top position (32.3 per cent), followed by China (10.2 per cent), Singapore (8.3 per cent), Ireland (6.9 per cent), and South Korea (6.1 per cent).

India has topped the chart at a time when Chinese investors have been making huge FDI commitments, consistently leading the chart over the last decade, according to the Department of Industry, where industries including those with FDI are registered. Till mid-June of fiscal year 2024-25, Chinese investment commitments to Nepal topped the chart with 44.77 per cent, followed by India with 19.55 per cent, the department said.

"India continuing to have dominant FDI stocks in Nepal suggests that huge FDI pledges from China have not been realised to the maximum levels," Prakash Kumar Shrestha, former Executive Director of NRB told IANS. "On the other hand, Indian FDI stocks in Nepal have remained since the early 1990s, and recently, Nepal received huge Indian investment to develop the 900 MW Arun 3 Hydropower Project in eastern Nepal," he added.

India’s SJVN Limited, a state-owned company, has been developing one of the largest hydropower projects in Nepal, which is now nearing completion.

The same Indian company has also been awarded two other hydropower projects — the 669MW Lower Arun Hydropower Project and the 490MW Arun-4 Hydropower Project. The latter will be developed in partnership with the Nepal Electricity Authority.

Rajesh Kumar Agrawal, former President of the Confederation of Nepalese Industries (CNI), a representative body of medium and large scale industries, said India's FDI stock continues to remain high because of the significant FDI Nepal received in the 1990s when companies including Unilever Nepal, Dabur Nepal and Arati Strips Pvt. Ltd among others established in Nepal with investment from India.

"Even though Chinese investment commitments have surpassed India's in recent years, it will take time for the realisation of Chinese investment commitments in Nepal," he told IANS.

Not all FDI commitments are realised, according to experts. "It depends on several factors — investment climate, market availability, investor mentality, the situation of alternative markets, among others," said Shrestha.

--IANS

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